Agrium again boosts cash portion of bid for CF Industries

KerryE. Grace

Agrium Inc.
AGU, +2.56%
said Monday it has again boosted the cash portion of its hostile bid for rival fertilizer maker CF Industries Inc.
CF, +1.91%
this time by 14%, as the company struggles to build shareholder backing for the $4.18 billion takeover effort during an ongoing three-way battle in the sector.

CF acknowledged receipt of the bid and said its board "will evaluate the revised proposal carefully."

Agrium, the largest of the three companies by revenue, said it will now offer $40 a share in cash from its previously sweetened offer of $35 a share. The stock portion of one share of Agrium for one share of CF remains the same.

The latest offer values CF at $85.20 a share - 18% higher than Agrium's initial offer in February - or $4.18 billion in total.

The move comes after Agrium tried to urge CF shareholders to withhold their votes from the board's slate of candidates last month. All three CF directors up for re-election were backed at the company's annual meeting.

Meanwhile, CF has made its own bid for a third peer, Terra Industries Inc.
TRA, -3.45%
CF has continued to call Agrium's offer "grossly inadequate."

The jockeying for position comes as fertilizer producers look to take advantage of the drop in sector stock prices since last summer to buy up production capacity ahead of an expected rebound in prices.

Agrium's shares were recently down 1.7% at $44.45 in premarket trading, while CF gained 4.3% at $76.94. CF said the latest offer values its shares at $85.20.

Agrium Chief Executive Mike Wilson said the "substantial increase" in cash provides CF shareholders with an attractive opportunity and reaffirms the company's commitment to the deal.

He added the company has attempted to meet with CF's management in recent days to discuss an increased offering price, but CF has rebuffed its efforts.

Agrium also extended the expiration date of its offer to midnight EDT, on June 15. It had been set to expire May 19. Agrium said as of midnight Friday 1.3 million of CF's 49.1 million shares outstanding had been tendered.

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